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I asked myself this question a few times and decided to do some research and I feel like some users would like to know what I found about the REITs vs Real estate debate:

Pros of REITs vs Real estate:

- Higher return on average

- Less risk (diversified REITs funds will never go to 0)

- More diversification

- REITs have management teams that have a lot of knowledge in the industry

- REITs are a lot more liquid

- Less capital required

- You don't have to find tenants, repair roofs, deal with tenants not paying/trashing the property

Pros of Real estate vs REITs:

- Having the ability to buy small properties at a good price (large REITs won't compete to buy a $500,000 property)

- You can live in the property you bought

- Ability to have a higher return if you buy at the right price

- REITs can be be expensive/inexpensive at times (valuations are volatile), property prices are not as volatile.

- tax deductions

- Possibility to have a higher leverage

- Lower correlation to the stock market then REITs, directly investing in real estate leads to more diversification

Obviously, I could be wrong and I could be missing out on a lot of points, feel free to comment and I'll add your thoughts to the list!

Sources:

- https://www.forbes.com/sites/marcprosser/2017/07/19/data-proves-reits-are-better-than-buying-real-estate/#994d8dad6b7d

- https://seekingalpha.com/article/4204857-reits-vs-rentals-best-way-invest-real-estate

- https://fundrise.com/education/blog-posts/reits-vs-rentals-whats-the-best-way-to-invest-in-real-estate



Submitted April 16, 2019 at 02:58PM by etienner http://bit.ly/2PbpTMD

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